Union Cabinet approves sale of govt's 52.63 pct stake in REC to PFC

The Cabinet Committee on Economic Affairs on Thursday approved the sale of the government's 52.63 per cent stake in REC Ltd to Power Finance Corporation (PFC). The government is expected to garner around Rs 15,000 crore from this merger.

"The CCEA gave in principle approval for strategic sale of the Government of India's existing 52.63 per cent of total paid up equity shareholding in REC Ltd to Power Finance Corporation along with transfer of management control," Finance Minister Arun Jaitley said at a press conference after the Cabinet meeting here.

The government held 57.99 per cent stake in REC, and 65.64 per cent in PFC at September-end. However, the government holding in REC came down to 52.63 per cent following stake sale through ETF.

Jaitley also said he had talked about the merger of public sector undertakings working in the same space in the budget for 2017-18.

In his budget speech, he had said there were opportunities to strengthen CPSEs through consolidation, mergers and acquisitions.

"By these methods, CPSEs can be integrated across the value chain of an industry. It will give them capacity to bear higher risks, avail economies of scale, take higher investment decisions and create more value for the stakeholders," he had said.